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YouTube will release a video-sharing feature called "Shorts" to compete with TikTok by the end of the year, The Information reported, citing people familiar with the plan. The short-form feature will be part of the video site's mobile app and will allow access to its library of licensed music for users to add soundtracks to their posts.

Shorts will have video editing tools for smartphone users to create content, which will be shown in a feed-like format akin to TikTok's. While YouTube isn't commenting on the feature, CEO Susan Wojcicki said the Google-owned company was looking at short-form videos, CNBC reported, citing an interview with NBC News' Byers Market Podcast that will stream later this month.

TikTok, owned by the Chinese company ByteDance, nearly doubled its downloads to a record 113 million in February from a year earlier, according to app analytics company Sensor Tower. TikTok's lifetime total of 1.9 billion downloads has made the viral video app one of the most popular social platforms in the world.

Insight:

YouTube's reported plan to develop a mobile feature for the sharing of short videos indicates that Google — and parent company Alphabet — may see TikTok as a threat to its digital advertising business, which is the biggest in the world.

YouTube's advertising revenue surged 36% to $15.1 billion in 2019, making it the fastest-growing segment for Google, whose ad sales grew 16% to $134.8 billion. The search giant is almost entirely dependent on ad revenue, heightening competition with TikTok as the consumption of mobile video grows, especially among young adults and teens. That rivalry will become more intense with the COVID-19 pandemic expected to cut Google's ad revenue as much as 18% this year, according to analysts cited by Variety.

It's too early to tell whether YouTube's planned Shorts feature will stop TikTok's growth juggernaut in the same way that Instagram's copying of Snapchat features like Stories was blamed for stalling growth for Snapchat, as reported by TechCrunch. Instagram and parent company Facebook, which is Google's biggest rival in digital advertising, have been working on their own TikTok clones as well.

Instagram started testing a feature called "Reels" in Brazil to let users create music videos, while Facebook launched an app called Lasso that focuses on viral short-form video content. So far, those efforts haven't made a dent in TikTok's growth, as Sensor Tower's data suggests.

While TikTok doesn't disclose its ad revenue, there are signs that efforts to build out its sales infrastructure are paying off for parent company ByteDance. Its TikTok Ads mobile network more than doubled (120%) its share of the app install market in the second half of 2019, a sign that app developers who spend heavily on mobile advertising are increasing their ad spend on the platform, as measured by mobile attribution and marketing analytics firm AppsFlyer. However, the researcher also found that Google had increased its share of mobile ad campaigns that target people who have previously used an app.